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This model is a reminder to cut your losses and focus on future opportunities rather than getting pulled down by past decisions.
Frater et T. Sin dicit obscurari quaedam nec apparere, quia valde parva sint, nos quoque concedimus; Nam aliquando posse recte fieri dicunt nulla expectata nec quaesita voluptate. Non autem hoc: igitur ne illud quidem. Quid enim ab antiquis ex eo genere, quod ad disserendum valet, praetermissum est? Qui-vere falsone, quaerere mittimus-dicitur oculis se privasse; Ut in geometria, prima si dederis, danda sunt omnia. Bork
Si verbum sequimur, primum longius verbum praepositum quam bonum. Itaque nostrum est-quod nostrum dico, artis est-ad ea principia, quae accepimus. Quodsi ipsam honestatem undique pertectam atque absolutam. Quando enim Socrates, qui parens philosophiae iure dici potest, quicquam tale fecit? Sin laboramus, quis est, qui alienae modum statuat industriae? Potius ergo illa dicantur: turpe esse, viri non esse debilitari dolore, frangi, succumbere. Atque haec coniunctio confusioque virtutum tamen a philosophis ratione quadam distinguitur. Cur igitur, inquam, res tam dissimiles eodem nomine appellas?
- Ask, ‘does this cost have an impact on what will happen in the future?’
Identify Sunk Co ... Lorem ipsum dolor sit amet, consectetur adipiscing elit. Quae cum magnifice primo dici viderentur, considerata minus probabantur. Quo modo autem optimum, si bonum praeterea nullum est? Iam in altera philosophiae parte. Tum ille: Tu autem cum ipse tantum librorum habeas, quos hic tandem requiris? Negabat igitur ullam esse artem, quae ipsa a se proficisceretur; Duo Reges: constructio interrete. Qualem igitur hominem natura inchoavit? Nunc ita separantur, ut disiuncta sint, quo nihil potest esse perversius. Maximus dolor, inquit, brevis est. Cum audissem Antiochum, Brute, ut solebam, cum M. Est igitur officium eius generis, quod nec in bonis ponatur nec in contrariis. Hoc mihi cum tuo fratre convenit. Quare conare, quaeso. Suo enim quisque studio maxime ducitur. Utrum igitur tibi litteram videor an totas paginas commovere? Quae cum magnifice primo dici viderentur, considerata minus probabantur. Perturbationes autem nulla naturae vi commoventur, omniaque ea sunt opiniones ac iudicia levitatis. Nec enim, dum metuit, iustus est, et certe, si metuere destiterit, non erit; Quid est, quod ab ea absolvi et perfici debeat? Tum, Quintus et Pomponius cum idem se velle dixissent, Piso exorsus est. Quamquam ab iis philosophiam et omnes ingenuas disciplinas habemus; Haec para/doca illi, nos admirabilia dicamus. Est autem etiam actio quaedam corporis, quae motus et status naturae congruentis tenet; Collatio igitur ista te nihil iuvat.
Identifying a Sunk Cost can be difficult when there is no precise way of comparing a loss to a gain. The desire to not appear wasteful also can limit your ability to base a decision on relevant costs exclusively, especially when you feel personally responsible for the investments representing sunk costs.
The Concorde Fallacy.
The Concorde Fallacy is an alternative name for the sunk cost fallacy, coming from the way the British and French governments continued to co-fund the development of the expensive Concorde supersonic aeroplane even after it became financially untenable. Their previous investment, financially and politically, was thought to determine the ongoing funding.
Eat too much?
A common example of the sunk cost fallacy is when someone buys a large meal, then overeats to ensure ‘they get their money worth’.
The sunk cost fallacy is an unconscious bias that arises from accounting and financial domains. It is an important consideration in decision making.
Use the following examples of connected and complementary models to weave the sunk cost fallacy into your broader latticework of mental models. Alternatively, discover your own connections by exploring the category list above.
Connected models:
- Cost-benefit analysis: to consider actual pros and cons of a choice
- Opportunity cost: to consider the potential loss of a future facing decision.
Complementary models:
- First principle thinking: in breaking down a situation to its basics.
- Inversion: considering the opposite, e.g. ‘how can we continue to make that loss again?’
- The Lindy effect: to challenge sunk costs and seeing past longevity as a potential positive.
- Availability heuristic: being overly impacted by immediate situations and losses.
- Lock-in effect: is there greater friction to breaking from the status quo.
Read N. Gregory Mankiw’s Principles of economics for information on various economic theories that involve the concept of sunk costs.
This brief article references some of the relevant studies arising from Behaviorual Economics and the Sunk Cost fallacy. Check this video resource for a quick overview of the sunk cost concept and how it applies to the Concorde supersonic plane case.
My Notes
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